Economist Dean Baker is up with a good post on the mainstream media’s current desire to separate ”pro-growth” and “income equality” strategies. The notion many seem to cling to, is that you can either be in favor of income equality (the 99%), or you can be pro-business. This is, of course, a load of hogwash. Supply and demand work together in the economy, and business does not thrive when consumers don’t have money to spend on their goods. The Great Recession was just the latest in a long line of proofs that demand cannot be ignored; the bursting of the asset bubble drained an estimated $500 billion in consumer wealth from the economy. That loss of wealth, in a nation with savings rates near zero, translated directly into a loss of spending.
This isn’t a complicated chain of events, but conservative ideology wants to make it so. The conservative ideological response to financial crisis, from day one, was to bail out the guarantors of risky debt (the banks and Wall Street idiots), and provide income tax breaks to upper income individuals and business. It shouldn’t take a rocket scientist to understand that tax cuts for businesses without customers and workers without jobs mean nothing; a lower tax rate on zero income means zero benefit. Despite the simplicity of the math, and despite the overwhelming historical evidence, conservative ideologues cling to the fantasy of a low tax business paradise. Pro-growth must, in their minds, mean tax reductions.
It doesn’t. Saint Ronnie the Gipper slashed taxes in the 80′s, and the result was lower growth than in the 70′s. W. slashed taxes in the first decade of this century, and the result was the lowest growth since the 1930′s. The greatest growth happened in the second half of the 30′s (under FDR’s New Deal), in the 40′s (during the War Effort), and in the 50′s. Those three stretches are characterized by growing income equality; the 21st Century version of America is characterized by growing income inequality. In business terms, income inequality means consumers have less money to spend on business products and service. Less consumer spending means more competition on price. More competition on price means downward pressure on operating margins and lower profits. More money in working class pockets, via good wages and fair competition in utility markets is always good for business.
Liberalism and income equality are pro-business and pro-growth.
The Rational Middle is listening…
Christians defending Muslims during prayer.
Columns about Israel and the geopolitics of the Middle East are a sure way to get passions to flare and, sometimes, attract hate mail. The conflicting positions of Zionism and antisemitism are typically used as the default for all commentary on the subject; the middle ground has no appeal in a win at all costs culture. Hatred, however, has far less power than the alternative (as the picture shows). These are the challenges that cross my mind as I reflect on President Obama’s calculated decision to include the Israeli/Palestinian negotiations in his speech on the Arab Spring.
The question of Israel isn’t a simple one, even for Jews. Philip Roth, in his interesting historical fiction, The Plot Against America, expressed a sentiment I have heard in some quarters: “…the poor old man who…seemed unable to get it through his head that we’d already had a homeland for three generations. I pledged allegiance to the flag of our homeland every morning at school. I sang of its marvels with my classmates at assembly programs. I eagerly observed its national holidays…Our homeland was America.” But it isn’t that simple either; driven out of Palestine by the Romans 19 centuries ago, the idea and reality of a Jewish Israel is powerful. And it needs to be noted that synagogues are really just an acceptable, temporary, replacement for the Temple to an observant Jew.
Capturing the views of 300 million isn’t an easy task, so we Americans have evolved a simple solution for solving political problems; we oversimplify everything. Literally every problem, challenge, obstacle, and opportunity facing our democracy is folded, compressed, and shoved into one of two boxes; liberal and conservative. That most domestic problems do not fit neatly into one of those oversimplified boxes should be obvious. Trying to shove the policies, priorities, and predilections of the world as a whole into our two neat little boxes is absurd.
But shove is one thing we Americans are exceedingly adept at; it is a strength when we are shoving the Nazis out of power. At other times, the tendency to shove causes many more problems than it resolves, and so it is that we come to our democracy’s uncertain view of President Obama’s foreign policy. Other presidents in our history liked to shove; this president prefers to have conversations. Teddy Roosevelt endorsed the notion of speaking softly while carrying a big stick. Until recently, many Americans believed that President Obama believed in speaking often and pretending like the stick didn’t exist.
Filed under the heading of useless government action; the Republican House (and three Democrats) voted to repeal the Affordable Care Act. In truth, they voted for the “Repealing the Job-Killing Health Care Law Act”, a magnificent example of snake-oil salesmanship. The action has no real political meaning; the Senate will never see the legislation because Republicans don’t have the votes to either open the debate or invoke cloture to force a vote. If the Senate were to pass a complement, President Obama would veto the action, and there aren’t enough votes in the House to override his veto.
But lets set aside the action, and move swiftly to the conservative premise for its taking. “Repealing the Job-Killing Health Care Law Act”, is the title, and it purports to explain the reason the GOP moved against the law. It isn’t immediately apparent why a law that addresses the principal source of American industry’s lack of competitiveness with European business would be a job killer. But Speaker Boehner has an answer, and his answer is a stunning example of hypocrisy and economic smoke and mirrors. We all, I am sure, remember that time long ago (two weeks ago), when the Speaker dismissed the CBO as “opinion”. We all also remember when then-Minority Leader Boehner consistently slammed the CBO over its scoring of the bill as a deficit-reducer.
President George W. Bush and the Republican Congress he worked with, added nearly $5 trillion to the national debt during his first six fiscal years. Members of The Rational Middle will not be surprised to read that statement. Bush’s doubling of the debt is not the reason for the Great Recession. Perhaps that statement is a surprise. A singular fact of economics needs to be understood by the citizens of this democracy, and that knowledge is needed now more than ever: budget deficits do not cause recessions.
Throughout this recession and recovery, the fact that budget deficits have nothing to do with recessions has been consistently ignored by those that do understand. Linking the two items has political benefits for both sides of our rusted two party system. Democrats were able to hammer Bush for his war spending and top heavy tax cuts, Republicans are able to hammer Obama and the Democrats for social and infrastructure spending. The Tea Party is able to lash out in anger at everyone, because the political figures in that group lack even the most basic knowledge of anything fiscal.
We the people are witnessing the stirrings of one of the truly rare events in nature; our Congress in action. The Senate has taken the extraordinary step of actually acting on a trio of bills in the same month; the food safety package, the START treaty ratification process, and the now infamous Obamadeal with the Republicans. The House, which in fairness is usually quite active, moved on the politically controversial Don’t Ask Don’t Tell repeal. In view of all this auspicious activity, writing a column on sports this evening seemed frivolous.
But then, Congress is something of a sport for me. Much like a football game, I enjoy watching the battle while trying to anticipate the next move. The next move in politics, incidentally, is rarely as complicated as modern professional football strategy. The only real variables are money, time, and political polling. Please don’t misunderstand, The Rational Middle does not believe in a Congress without principles, far from it. I believe that most politicians, from both parties, genuinely care about their nation and retain their principles throughout their careers. I also believe, however, that politicians must be pragmatic, lest they not be around the next time their principles need defending.